Forex Trading Fundamental Analysis: Mixed Data Lifts AUD – May 29, 2014

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Forex Trading Fundamental Analysis: Mixed Data Lifts AUD - May 29, 2014

The US dollar dominated against its major forex trading counterparts in recent trading, as US bond yields renewed demand for the currency. There were no reports released from the US economy yesterday while today has the revised GDP reading, initial jobless claims, and pending home sales data on tap. The Q1 GDP figure could see a downward revision from 0.1% to -0.6%, which could be negative for the US dollar. Initial jobless claims might dip from 326K to 321K while pending home sales could chalk up a 1.1% gain.

The euro fell to its major forex trading counterparts when data from Germany and France missed expectations. French consumer spending slipped by 0.3% instead of gaining by the estimated 0.5% figure while Germany showed a 24K rise in joblessness instead of the 14K projected decline. Euro zone economies are on holiday today which means thinner liquidity and possibly higher volatility in today’s London trading session. There are no major reports up for release from the region.

The pound made a strong break below a significant support area against the dollar, signaling that longer-term losses might be in the cards. UK CBI realized sales slipped from 30 to 16 instead of improving to the forecast at 36. Only the GfK consumer confidence index in the UK is due today and a small improvement from -3 to -2 is eyed, reflecting a lower degree of pessimism, but a weaker than expected result might lead to a deeper pound selloff.

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Forex Trading Recap

The yen continued to gain ground against its forex trading counterparts on the heels of BOJ optimism, but gave up some wins when the retail sales figure showed a 4.4% decline. Take note that this includes the April sales tax hike effect and that markets are expecting further weakness in the upcoming reports. Household spending, CPI, industrial production, and the jobless rate are due in tomorrow’s early Asian trading session.

The Kiwi was a big loser in recent forex trading as NZD/USD broke below a key support level. Fonterra announced that it would reduce payouts to producers and estimated lower milk prices in the coming months, possibly enough for the RBNZ to downgrade its growth and inflation forecasts and rethink its hawkish stance. In Canada, the current account reading is up for release but traders might sit on their hands ahead of tomorrow’s GDP report. Australia reported a 4.2% decline in quarterly private capital expenditure, worse than the estimated 1.6% drop, yet the Aussie managed to go for rallies when the previous quarter’s reading was revised higher.

To contact the reporter of the story: James Brennan at james@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.